Electricals giant calls in advisers as cost pressures mount
Electricals giant DSGi aims to take the axe to its cost base following a series of setbacks.

The retailer is understood to have drafted in Boston Consulting to advise on the initiative, which will assess opportunities for efficiencies across the retailer's international operations.

One source familiar with the situation said that savings could reach 'tens of millions of pounds'. 'It's a big project and there will be no sacred cows,' he said.

However, others were sceptical as to whether such savings could be achieved, given that DSGi is a tightly-run ship and has stripped out significant costs already.

DSGi chief executive John Clare has frequently spoken out against the pressure being exerted on retailers by rising costs, in particular the expense of property. He has acted rapidly in response, notably by shifting the famous Dixons brand off the high street and entirely online last year. The retailer has also made improvements to buying and logistics.

The UK retail industry is expected to face a cost burden of£10 billion this year, according to Verdict. Costs are likely to rise by 3.5 per cent, outstripping expected sales growth of 2.9 per cent.

A DSGi spokesman confirmed that consultants were examining possible consolidation of processes for the retailer. 'It's far too early to indicate what the outcome of the review of those processes will be,' he said.

DSGi reported flat underlying interim profits of£96.9 million in January, and disclosed that its Italian UniEuro chain would not meet full-year expectations.

Since then, the retailer has shut the 11-store PC City chain in France. It suffered a second blow in France when warehouse fraud was discovered, resulting in a one-off cost of about£10 million.

Pali International analyst Nick Bubb estimated that DSGi's UK cost base alone to be about£900 million. He said: 'It is undoubtedly under pressure to improve shareholder value. If you can't get sales moving you've got to look at costs. If you've got big costs, you just have to keep the pressure on.'